Chile Business

Can Chile Become a First World Country?
Minister of Foreign Affairs, Alejandro Foxley R.
“The Second World: Empires and Influence in the New Global Order” is the title
of a recently published book from Random House in New York. It is a fascinating
essay on Second World nations, those countries that can no longer be classified
as poor yet cannot be considered developed. Which of these nationshave a real
possibility of joining the First World in the foreseeable future? Following an indepth, region by region analysis, the author, Parag Khanna, focuses on Latin
America and names Chile as the country with the greatest possibility of meeting
these strict criteria in the coming years.
The book also maintains that the future will be dominated by three super powers
battling for hegemony– the United States, the European Union and China. It
argues that it is among the nations of the Second World where the future global
order will be defined, and which one of these superpowers will prevail.
The Second World, according to the author, is made up of about 100 countries.
All of these nations are struggling to become fully developed, always having to
navigate in turbulent waters,with political, economic and social indicators
changing direction frequently. There are successes in some areas and setbacks
in others.
It would be wise for these countries to move about in this multipolar world,
searching for ever-increasing windows of opportunity. This requires an active
foreign policy with a denser network of political, economic and cultural ties with
the three blocks. Inaddition, the fact that China is quickly gaining ground on the
other two cannot be ignored. There is a slow but persistent shift towards that
country becoming the center of world power. The recent successful visit by
President Bachelet to China is a milestone in the willingness of this Second
W orld country, Chile, to persevere in attaining its goal of being China’s preferred
partner inLatin America.
New and More Demanding Tasks
Recent studies by the World Bank also place growing attention on the countries
of the Second World, which it refers to as “Middle Income” countries. It
recognizes the successful transitions to the First World, over the past 2 or 3
decades, by countries such as Spain, Portugal, South Korea, Singapore and
Taiwan (preceded by Japan). It names the “newbatch”, which includes
Malaysia, Thailand and Chile. It points out, however, that the main risk for these
countries is a slowing down of growth, which results inevitably in social
pressures, income distribution disputes and, to use a popular phrase, “ruffled

politics.” These lead to the self-fulfilling prophesy of the “wasted historical
opportunity”.
These are countries that are in theprocess of glo balization. They depend in a
critical manner upon the success of their exports. In the first stage, this only
requires timely access to traditional foreign markets, which have become more
open. In the case of Chile, the World Bank study states that we are still in the
phase where 85% of the increase in exports is based on companies that produce
“more of the same” for traditionalmarkets. An additional 10% is due to new
markets opened up by free trade agreements. Only 5% of the increase in
exports comes from new products, developed with the use of new technologies,
which help diversify the export goods basket.
The World Bank study qualifies this level of diversification as poor. Production of
“more of the same” does not lead to development over a reasonable period oftime. If we want to avoid the trap of insufficient growth, into which many Second
W orld countries often fall, it is vital that we move quickly towards a knowledgebased society, more innovative and capable of taking full advantage of the
potential talent and human capital among its citizens; one able to create new
niches where the country can be competitive.
Looking at World Bank data once...